Though economic matters have topped the list of voter concerns through much of the 2008 presidential campaign season, the tumult which hit the financial sector in mid-September compelled both Sen. John McCain (R-AZ) and Sen. Barack Obama (D-IL) to get into much greater detail on how they view the problems afflicting the banking and financial sectors. Both claim the "reformer" mantle, and each had offered detailed policy proposals on energy, trade, and social security. But the specific questions of regulatory reform of Wall Street really only took shape after the collapse of Lehman Brothers and the government rescue of the world's largest insurer, AIG. McCain backed the bailout (Reuters) of investment giant Bear Stearns in March, which was sold to JP Morgan Chase at a discounted rate with taxpayers guaranteeing its debt. Obama was a bit more cautious in his response to the Federal Reserve's intervention in Bear Stearns. "I wasn't privy to Bear Sterns balance sheets. But I think the idea that the Federal Reserve has to step in in emergency situations is something I wouldn't challenge," he said in an interview with CBS News. Both campaigns supported larger interventions in September, when the government absorbed mortgage giants Fannie Mae and Freddie Mac, intervened to stave off the collapse of AIG, and made hundreds of billions of dollars available for possible future loans.

McCain and Obama, as well as their respective running mates, Gov. Sarah Palin (R-AK) and Sen. Joe Biden (D-DE), all say they support major reforms to improve regulatory oversight of financial institutions and to protect taxpayers from assuming future risk. Public record searches generally support the Obama campaign's contention that their candidate favored moves to shore up government regulation of thrifts and investment banks earlier than the McCain camp, which stressed the GOP orthodoxy-deregulation-until serious problems appeared in the banking system in September.

Generally, the Democratic ticket blamed financial turmoil on the Bush administration's deregulatory philosophy, which Obama characterized as "we should give more and more to those with the most and hope that prosperity trickles down to everyone else." McCain and Palin, meanwhile, attributed the problems (WashPost) to the "greed and mismanagement of Wall Street and Washington," and insisted that a Democratic administration invariably would overact and enact regulation that would retard future economic growth and innovation.

President Obama voted in favor of the $700 billion Emergency Economic Stabilization Act in October 2008, but, he said, "The fact that we are even here voting on a plan to rescue our economy from the greed and irresponsibility of Wall Street and Washington is an outrage."

Upon the House bill's initial failure, Obama urged a return to the negotiating table, and suggested the addition to the bill of a measure that increased the limit on federal deposit insurance from $100,000 to $250,000 (Reuters).

Obama says he supports the Treasury Department's plan to inject money directly into struggling banks, but in October 2008 said the plan must be "implemented in a way that helps homeowners and does not enrich Wall Street CEOs at the taxpayers' expense." He has called for a ninety-day moratorium on home foreclosures.

Following the collapse of Bear Stearns in late March, Obama introduced a six-point plan (PDF) to improve government regulation of financial institutions. The Obama plan would provide the Federal Reserve with authority over "any financial institution to which it may make credit available as a lender of last resort." At a minimum, Obama says, that oversight should apply to the liquidity and capital requirements of those institutions. Obama also advocates tighter capital, liquidity and disclosure requirements for all financial institutions, and says U.S. regulatory agencies should be streamlined to end competition and overlap. Obama proposes altering the financial oversight structure to regulate all institutions in the same way, saying a fragmented oversight framework "has failed to protect homeowners, and it is now clear that it made no sense for our financial system." He has also said the Securities and Exchange Commission (SEC) should "crack down" on market manipulation. Finally, Obama's plan includes the creation of a financial market oversight commission which would "meet regularly and report to the president, the president's Financial Working Group and Congress on the state of our financial markets and the systemic risks that face them." Obama's plan does not mention any alterations to the Sarbanes-Oxley Act of 2002 (PDF), legislation designed to improve accountability in the financial industry.

Obama called the September 2008 government bailout of AIG "the final verdict on the failed economic philosophy" of the Bush administration, and called on the Federal Reserve to "ensure that the plan protects the families that count on insurance." He urged the Federal Reserve not to bail out AIG's shareholders or management. Top Obama campaign economic adviser Jason Furman told NPR that Obama would not be "second-guessing the Federal Reserve at a time like this." Furman said economic stimulus  has a role to play in ending these major bailouts. The government needs to "prop up our economy as a whole with a fiscal stimulus," he said. "We need far more ambitious measures to deal with the root of this problem, which is in the housing sector."

Obama also sent a letter urging Treasury Secretary Henry Paulson not to allow outgoing CEOs of Fannie Mae and Freddie Mac to receive "inappropriate windfall payments." Days later, he praised Paulson for blocking those "golden parachutes."

Obama released an "Emergency Economic Plan" in August 2008 to cut taxes for 95 percent of working families, grant $25 billion in a "State Growth Fund" to prevent local cuts in health, education and housing assistance spending, and grant $25 billion in a "Jobs and Growth Fund" for infrastructure jobs.

Sen. Biden (D-DE) voted in favor of the Emergency Economic Stabilization Act in October 2008.

Biden supports increased regulation and transparency in the financial industry. "If we're going to bail you out, if we give you an opportunity, if we give corporations the inside track, then you better damn well open your books to us and let us see exactly what you have," Biden said in September 2008.

Biden said he opposed the federal bailout of AIG in September 2008 in an interview with the Today show. Soon after, he appeared to back off of that position, telling an Ohio crowd he had not yet been briefed on the matter.

In a February 2007 op-ed in the San Jose Mercury News, Biden praised the Sarbanes-Oxley Act of 2002 as having "helped restore confidence in American companies by holding corporate executives more accountable for their record-keeping and financial reporting, improving the quality of corporate auditing, and requiring greater transparency of companies' financial statements."

Sen. McCain (R-AZ) voted in favor of the Emergency Economic Stabilization Act in October 2008. In September 2008, McCain briefly suspended his campaign to return to Washington, D.C. to work on the economic rescue plan. McCain laid out a set of principles he hoped would guide the bill, including "responsible oversight, effective transparency, added protections for the taxpayers, and a cap on excessive salaries for executives." He also said the legislation should not include earmarks. Following the bill's failure, he urged Congress "immediately to address this crisis."

Though McCain once supported legislation (WashPost) to deregulate banking and insurance industries, in September 2008 he came to support regulation of the markets to rectify financial problems he attributes to "failed regulation, reckless management, and a casino culture on Wall Street." McCain has called for "strong and effective regulation" and an investigation into possible unethical behavior by Wall Street executives. McCain economic adviser Douglas Holtz-Eakin says McCain had to alter his position (BosGlobe) on regulation in light of the "unprecedented once-in-a-100 years [sic] crisis for the financial markets." In an interview with NPR, Holtz-Eakin said the most pressing economic question was not whether to regulate more or less. "It's making sure the playing field is level and that everyone gets a fair chance," he said. Holtz-Eakin expressed concern about the burden of debt placed on taxpayers. "We can't do this, where private individuals, shareholders and management are making a pile of money at the taxpayers' expense," he said.

If elected, McCain pledged in a September 2008 speech, he will ensure that the FDIC and Securities Investor Protection Corporation "will have all the support they need to fully back the savings of the American people." He also criticized what he called an "alphabet soup" of financial regulatory agencies. "[W]e don't need a dozen federal agencies doing the job badly-we need the best federal agencies to do the job right," he said. McCain promised to mandate "constant access to the books and accounts of our banks and other financial institutions," and  implement reforms to prevent "wild speculation." He has also called for a commission modeled after the 9/11 Commission "to find out what went wrong and to fix what's going to happen in the future so this never ever happens again."

McCain said in a September 2008 presidential debate that he would impose a federal spending freeze "on everything but defense, veteran affairs and entitlement programs." In October 2008, he released a "Pension and Family Security Plan," which includes an estimated $52.5 billion (Reuters) in proposals to help retirees and investors rebound from recent financial turmoil.   Under his plan, senior citizens would pay a maximum of ten percent tax on funds withdrawn from IRAs and 401 (k) retirement plans in 2009 and 2010. He would also change IRS rules capping the amount Americans can deduct from their taxes at $3000 in stock losses each year. He would increase that deduction to $15,000 a year in 2008 and 2009.

McCain voted in favor of the Sarbanes-Oxley Act of 2002, which tightened corporate accounting rules following the abuses at Enron and other large companies. Aides to McCain told Politico in February 2008 that McCain continues to support that legislation, but has taken a "wait-and-see attitude" about future changes to the law.

In 1999, McCain voted in favor of the Gramm-Leach-Bliley Act, intended to increase competitiveness among financial institutions by dropping barriers between banking, investment and insurance companies.

Palin says the U.S. financial regulatory system "is outdated and needs a complete overhaul." In a September 2008 speech (FOX), Palin praised the Federal Reserve and U.S. Treasury for deciding not to bail out Lehman Brothers, and said a McCain-Palin administration would stop "multi-million dollar payouts and golden parachutes to CEOs who break the public trust."